Business

Q1: What is the meaning of average? What are its types?

Ans: An average is a single value that represents the whole set of figures and all the others individual items concentrate around it. In other words, an average is single value within the range of the data that is used to represent all of the values in the series, such an average is somewhere within the range of the data, it is therefore called measures of the central tendency.

Types of averages

There are different kinds of average. The following are the important type:

1) Arithmetic mean:

It is the most popular and widely used measure of central tendency. Generally, when we talk of “average”, it signifies arithmetic mean. It is generally known as “mean”. It is defined as the value which is obtained by adding all the items of a series and dividing this total by the number of items.

Merits of arithmetic mean:

1) It is easy to calculate and simple to understand.

2) It is based on all the observations.

3) It is capable of further algebraic treatment

4) It is rigidly defined.

5) It is a calculated value and not based on the position of the series.

6) Good basis for comparison.

Demerits of arithmetic mean:

1) It cannot be calculated in open ended series.

2) It cannot be determined for one missing term.

3) It cannot be used in qualitative data.

4) It can be a figure which does not exist in data.

5) It cannot be ascertained graphically.

Properties of arithmetic mean:

1) The sum of the squares of deviations taken from the mean is always minimum.

2) The sum of deviations of items from the mean is equal zero.

3) The mean of all the sums or deference of corresponding items in two series is equal to the sums of the mean of two series.

4) The mean is independent of...